Relaxo Footwears registers a 9.6% growth in revenue; shares rise over 3%

Relaxo Footwears share price: Shares of Relaxo Footwears jumped over 3 per cent on NSE on May 10 after the company reported a 9.6 per cent rise in revenue from operations to Rs 765 crore for the quarter that ended March 2023. At the time of writing this report, Relaxo Footwears scrip traded over 3 per cent higher on NSE at Rs 897 apiece, and on BSE, the stock quoted at Rs 895.8 apiece.

On Wednesday, May 10, 2023, Relaxo Footwears released its results for Q4FY23 which showed that the company recorded a profit of Rs 63.3 crore in FY23 Q4 as compared to Rs 62.9 crore a year ago. The company's margin — a key measure of profitability for a business — was down by 44 basis points to 15.42 per cent from 15.86 per cent year-on-year (YoY).

Meanwhile, the earnings before interest, taxes, depreciation, and amortisation (EBITDA) year-on-year (YoY) were up by 6.3 per cent and stood at Rs 118 crore during the quarter ending March 31 from Rs 111 crore last fiscal.

Relaxo Footwears dividend

The company also announced a final dividend at the rate of Rs 2.5 per equity share.

What do brokerages suggest?

B&K Securities has given a ‘hold’ rating on shares of Relaxo Footwears for a target price of Rs 1,140 apiece. “We initiate coverage on the Indian footwear sector having a robust topline-led growth ahead,” the brokerage said.

Sharekhan recommended buying shares of Relaxo Footwears for a target price of Rs 930 apiece. “With a strong portfolio of value-for-money footwear products, enhanced capacity of 10.5 lakh pairs per day, and expansion in distribution reach (especially in southern markets), Relaxo is well-poised to achieve revenue and earnings CAGR of 12 per cent and 15 per cent, respectively, over FY2022-FY2025E,” the brokerage said.

"The company reported relatively modest sales growth for the entire fiscal year FY23, and the company's EBITDA margins took a serious hit for the year, resulting in a degrowth of almost 34% in profits," said Diwakar Rana, Senior Research Analyst, Prudent Equity.

He added the company still faces difficulties, due to an increase in raw material costs and fierce competition from unorganized footwear companies in the market. The considerable decline in the company’s financial performance over the last 3 to 4 years and the extremely high valuation does not make Relaxo a wise investment for investors, and we do not feel that investors should participate in the company unless the company shows some signs of recovery over the long term.

Relaxo Footwears share price history

On a year-to-date (YTD) basis, Relaxo Footwears stock has declined over 1 per cent as compared to a 0.7 per cent rise in Nifty50.

On a six-month basis, the stock dipped nearly 3 per cent against Nifty50’s decline of over 0.14 per cent.

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